Seoul can aid GM Korea only when it confirms GM turnaround plan: KDB

Seoul can aid GM Korea only when it confirms GM turnaround plan: KDB

State-run Korea Development Bank (KDB) maintains it cannot help with the existing debt and losses of GM Korea, but can offer fresh funding once it studies the cost structure and turnaround plan from the Detroit-based headquarters, said KDB chair Lee Dong-geol.

“The old money (past losses and debt) is the responsibility of GM, and not ours,” he said as he awaits a new round of talks with Barry Engle, GM’s head of international operations, who arrived on Wednesday amid stalemate in the GM Korea ordeal.

After announcing the plan of shutting down a factory in Gunsan, southwest of Seoul, early last month, GM proposed fresh investment of 3 trillion won ($2.82 billion) including the allocation of new vehicles and converting 3 trillion won debt owed by its ailing Korean operation into equity. It asked KDB to participate in the recapitalization scheme in the amount of 17.02 percent stake the bank owns, the carmaker said.

KDB is waiting for cost and turnaround details from GM to embark on due diligence.

“(GM Korea) is still holding onto a very sensitive document in the process of conducting working-level consultation for due diligence,” Lee said, underlining that due diligence is aimed at finding how GM Korea will survive if GM pushes ahead with its self-rescue plan by reviewing overall cost structure of the Korean operations rather than blaming past wrongdoings.

Meanwhile, GM is suspected of dawdling to keep negotiations in its favor or finding excuse to pull out of Korea citing uncooperative union that threatens general strike instead of pain-sharing.

GM Korea CEO Kaher Kazem reportedly told union representatives that the headquarters may not allocate the new models to the Korean operation as it cannot wait forever for progress in Korea.

Assigning new lucrative models is central to keep alive the Korean operation that has been producing at just half of its capacity for the last few years.